Employee’s Duty to Act Reasonably to Mitigate Damages on Dismissal

Employees who have been dismissed from a job are required to make reasonable efforts to mitigate their damages – for example, by performing a job search, or in some circumstances by accepting a comparable job from their employer – but they are not required to take every possible step to find another job.

Three recent decisions of the Court of Appeal of Québec outline the importance of taking a contextual approach in analyzing an employee’s duty to mitigate, especially in circumstances where mitigation efforts are unlikely to be successful, such as where an employee is aging or has a serious mental illness.

In the Evans decision, the Supreme Court outlined an objective standard, requiring the court to consider whether a reasonable person in the same situation as the employee would have accepted an alternative offer of employment from the employer after dismissal in order to mitigate his or her damages.

In the course of this contextual analysis, courts must consider a number of factors including:

whether the salary offered is the same;

whether the working conditions are significantly different;

whether the work in the new role is degrading;

whether the personal relationships involved are or are not acrimonious;

the history and nature of the job;

the existence of an action brought by the employee; and

when the employer presents its offer (before or after the employee’s departure).

In Québec, Article 1479 of the Civil Code addresses mitigation, but the principles of analysis are similar to those applied under common law. Article 1479 provides that a person who is liable for an injury is not responsible for any aggravation to the injury that the victim could have avoided. In the employment context, this requirement has been found to have two parts. The first requires that the employee make reasonable efforts to find a job in the same or a related field, and the second that the employee not refuse job offers that are reasonable in the circumstances.

Facts

Paul Brouillette was initially hired by Le Group Gareau Inc. in 1985 as a car salesman, and rose to the position of managing director – making $64,000 plus a bonus of $10,000 annually, with the use of two courtesy cars – over the course of his 20 years of service with the car dealership. He was 57 years old at the time of his dismissal.

When Mr. Brouillette returned from sick leave in September 2004, another employee held his position and Gareau offered him three options – continue his sick leave or take either a clerk or a sales position. Gareau then discontinued his pay. Shortly afterwards, Mr. Brouillette demanded pay in lieu of notice, and was offered a job as a manager of the service department with no reduction in salary. He accepted the position, but Gareau substantially reduced his salary and work hours several days later. Mr. Brouillette refused the changes and filed an action for wrongful dismissal.

Trial Decision

The trial judge found that Mr. Brouillette had been constructively dismissed by Gareau. The judge also found however, that while he was not obliged to accept the second employment offer from Gareau, he had failed to fully mitigate his damages though his job search, and reduced what would have been a 12 month award to six months.

This decision was based on the trial judge’s findings of fact that Mr. Brouillette had waited ten weeks before starting his job search, had not used his contacts within the industry, had limited the geographic scope of his search to his region of residence, and had taken longer than a younger employee who had resigned during the same period to find a job.

Appeal and Cross-Appeal

Gareau appealed the amount of damages awarded, claiming that Mr. Brouillette should have mitigated his damages by accepting the service department manager job offered. Mr. Brouillette cross-appealed seeking to increase the amount of notice that he had been awarded, and claiming that he had properly mitigated his damages, and that his award should not have been reduced.

The Court of Appeal dismissed the appeal with costs and allowed the cross-appeal, adding five months of notice to his award – in effect only reducing the total award by one month for insufficient mitigation. The Court found that Mr. Brouillette was not required to accept the alternative position that he had been offered. It also found that he had acted reasonably to mitigate his damages, and that the trial judge imposed a burden on Brouillette that went beyond what could be required of a reasonable person in similar circumstances.

The Court highlighted the importance of taking into account the non-tangible aspects of the contextual analysis, including workplace atmosphere, stigma and loss of dignity. In this case, there was animosity between the parties, the offer was made after his dismissal, and would have involved a reduction in both his responsibilities and compensation, which a reasonable person in Mr. Brouillette’s circumstances would have found embarrassing.

The Court noted that Mr. Brouillette was a long term employee, and required time to absorb the shock of dismissal and think about the direction of his career. He had not limited his search to management positions, and was willing to accept lower paid positions in sales, which he obtained through contacts in October, 2005. In terms of the geographic scope of his search, the Court found that it was reasonable for him to search in an area close to his home where there were a number of car dealerships. It also took into account the difficulty of undertaking a job search during the winter holiday season. Finally, the Court also found that Mr. Brouillette should not have been compared to the other employee who had resigned from Gareau in the same period given the differences in their circumstances.

The Levy decision involved a 75 year old employee who had worked for his employer, Standard Desk, for almost 38 years, and who was dismissed when the company closed its doors for economic reasons. In this case, Mr. Abraham Levy refused a job offer with similar responsibilities and compensation with a related company in a nearby region. The Court of Appeal found that given his age, the increased burden of transportation to the new job meant that the job offered to Levy was not equivalent, and that it was not unreasonable for him to have refused it. It was also clear to the Court that in this case, given Mr. Levy’s age, that a job search would likely have ended in failure, and that Mr. Levy should not be penalized for his failure to mitigate.

The Carrier decision involved an appeal against the decision of a trial judge to reject an application for judicial review of two decisions of Québec’s Commission des relations du travail. Mr. Francois Carrier was an employee of Mittal Canada Inc., who had been the subject of workplace bullying and harassment during the course of his employment, leading to depression. The Court noted that realistically, after three years of depression and his total absence from the workforce, it was highly unlikely that Mr. Carrier would have found a job during the period in question, even if he had made the mitigation efforts required. In circumstances like Mr. Carrier’s, an employee should not be penalized for not finding a job quickly.

These three cases demonstrate the importance of taking a contextual approach in analyzing an employee’s duty to mitigate. In circumstances where an employee’s job search efforts are unlikely to yield results or where it would be unreasonable to accept an alternative job offer given the context, the employee should not be penalized for failing to mitigate.